The survey measures the current business activity of the commercial (office, education, healthcare, and hospitality) furniture industry and its suppliers.

“In spite of the across-the-board declines in all ten index values, we believe that the industry remains very strong,” Dunlap said. “It’s a correction, combined with routine first quarter issues.

“We have had several quarters of increasing growth and we are probably past time for a modest correction. The first quarter was hit with tariffs, inclement weather, and labor shortages that affected several elements.

“We feel good about where the industry is currently. 2018 finished strong in spite of the political uncertainties, the effect of the mid-term elections, tariff and trade questions, The effects of the next round of tariffs are still too early to predict, but it is reasonable to believe that it will dampen second and third quarter numbers.”

The April 2019 Survey Index of 55.58 is just slightly below the 57-survey average. All ten index values declined from the previous quarter, but each remained within normal or acceptable values. The highest recorded Index of 59.72 in July 2005. The lowest was 41.45 in April 2009 during the bottom of the recession.

The overall economic growth will likely affect this industry. Dunlap said, “We are surveying many more than five or six companies. The ‘Big Nine’ are experiencing excellent growth, the smaller under $50 million sales and fewer than 250 employees are driving this industry. Outlook is a purely emotional question but we put a lot of value on this content.”

The most frequently cited perceived threats to the industry’s success continue to be tariffs, travel, transportation and logistics costs. Healthcare costs have been the most commonly cited concern from respondents since this survey process was started in August 2004.

The April 2019 gross shipments index declined more than six points to 57.73 which is slightly below the 58.23 survey average. The index was 64.40 in January 2019.

The order backlog index was 55.00 in April 2019 Index. It fell by almost 12 points over the fourth quarter. January was the highest Dunlap has seen since the survey began in 2004. It was well above the 57-survey average and was remarkably very strong.

For the gross sales index, the quarter-over-quarter decline is significant, but it is in the mid-50s and remain on solid ground. Dunlap expects to watch these two index values very closely during the second and third quarter of 2019.

The employment index measures the degree of increase or decrease in employment levels. The April 2019 index 55.00 was nearly stable and declined by only 0.20 points.

The hours worked index is closely tied to the employment index. When the hours worked index exceeds the mid 50s (usually due to overtime), the following one or two quarters often see increases in the employment index. The hours worked index slipped by 3.5 points from January 2019 and remains above the survey average. Dunlap views this is still reflective of the inability to fill both entry level and skilled positions which are still are driving up hiring and hours worked.

Historically, the capital expenditures index has steadily been in the mid to upper 50s, Dunlap said. The April 2019 index slipped by almost nine points over the January index. It is slightly lower than average. The all-time high was 64.74 in April 2017.

The tooling expenditures index tends to remain very steady from quarter to quarter and typically tracks along with capital expenditures, but the significant decrease during the first quarter is an unpleasant surprise, Dunlap said. As a benchmark, the April 2017 Index of 66.65 was the previous all-time high.

The personal outlook index has slipped slightly from the previous quarter, this index has remained high and most certainly gives a boost to the overall index, Dunlap said.

The April 2019 MADA / OFI Trends survey was sent to more than 550 individuals involved with the commercial furniture industry’s manufacturing and suppliers from Africa, Asia, Australia, Europe, North and South America and from companies ranging from more than $1 Billion in sales to less than $500,000 in sales. The survey repeats in July 2019. For further information, contact: Mike Dunlap at 616-786-3524, http://www.mdunlap-associates.com.

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About the Author:

Karl D. Forth

Karl D. Forth is online editor for CCI Media. He also writes news and feature stories in FDMC Magazine, in addition to newsletters and custom publishing projects. He is also involved in event organization, and compiles the annual FDM 300 list of industry leaders. He can be reached at karl.forth@woodworkingnetwork.com.